Canadian Tire Corp Ltd Valuation – August 2018 $TSE:CTC.A

Company Profile (excerpt from Reuters): Canadian Tire Corporation, Limited is a Canada-based company, which operates through a range of businesses. The Company’s segments include Retail, CT REIT and Financial Services. Its retail segment operates through its retail banners, including Canadian Tire, PartSource, Petroleum, Mark’s, and the various FGL Sports banners. CT REIT is engaged in owning, developing and leasing of income-producing commercial properties. It has a portfolio of properties, which consists of over 300 properties located across Canada totaling approximately 24.7 million square feet of gross leasable area. Financial Services markets a range of Canadian Tire-branded credit cards, including the Canadian Tire Options MasterCard, the Cash Advantage MasterCard and the Gas Advantage MasterCard. It also markets insurance and warranty products, processes credit card transactions for purchases made in Canadian Tire stores and Mark’s stores as well as at Petroleum outlets, and offers financing options.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of TSE-CTC.A – August 2018

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $10,951,365,292 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.82 Fail
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 104.14% Pass
6. Moderate PEmg Ratio PEmg < 20 16.40 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 2.12 Pass
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 1.82 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 0.87 Pass
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $10.08
MG Growth Estimate 7.51%
MG Value $236.97
Opinion Undervalued
MG Grade B
MG Value based on 3% Growth $146.11
MG Value based on 0% Growth $85.65
Market Implied Growth Rate 3.95%
Current Price $165.27
% of Intrinsic Value 69.74%

Canadian Tire Corporation Limited Class A qualifies for both the Defensive Investor and the Enterprising Investor. The Defensive Investor is only initially concerned with the low current ratio. The Enterprising Investor has no initial concerns. As a result, all value investors following the ModernGraham approach should feel comfortable proceeding with the analysis.

As for a valuation, the company appears to be Undervalued after growing its EPSmg (normalized earnings) from $6.72 in 2014 to an estimated $10.08 for 2018. This level of demonstrated earnings growth outpaces the market’s implied estimate of 3.95% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value above the price.

At the time of valuation, further research into Canadian Tire Corporation Limited Class A revealed the company was trading above its Graham Number of $134.18. The company pays a dividend of $2.6 per share, for a yield of 1.6% Its PEmg (price over earnings per share – ModernGraham) was 16.4, which was below the industry average of 30.61, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-27.87.

Canadian Tire Corporation Limited Class A performs fairly well in the ModernGraham grading system, scoring a B.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$27.87
Graham Number $134.18
PEmg 16.40
Current Ratio 1.82
PB Ratio 2.12
Current Dividend $2.60
Dividend Yield 1.57%
Number of Consecutive Years of Dividend Growth 7

 

Useful Links:

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Yahoo Finance Seeking Alpha
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Most Recent Balance Sheet Figures

Balance Sheet Information 6/1/2018
Total Current Assets $8,394,800,000
Total Current Liabilities $4,608,100,000
Long-Term Debt $3,312,200,000
Total Assets $15,313,900,000
Intangible Assets $1,282,700,000
Total Liabilities $10,219,800,000
Shares Outstanding (Diluted Average) 65,489,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $11.20
Dec2017 $10.67
Dec2016 $9.22
Dec2015 $8.61
Dec2014 $7.59
Dec2013 $6.91
Dec2012 $6.10
Dec2011 $5.71
Dec2010 $5.42
Dec2009 $4.10
Dec2008 $4.60
Dec2007 $5.05
Dec2006 $4.31
Dec2005 $3.98
Dec2004 $3.53
Dec2003 $2.95
Dec2002 $2.53
Dec2001 $2.23
Dec2000 $1.89
Dec1999 $1.89
Dec1998 $2.09

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $10.08
Dec2017 $9.21
Dec2016 $8.22
Dec2015 $7.47
Dec2014 $6.72
Dec2013 $6.07
Dec2012 $5.49
Dec2011 $5.12
Dec2010 $4.78
Dec2009 $4.44
Dec2008 $4.51
Dec2007 $4.30
Dec2006 $3.77
Dec2005 $3.34
Dec2004 $2.89
Dec2003 $2.48
Dec2002 $2.21

Recommended Reading:

Other ModernGraham posts about the company

6 Best Stocks for Value Investors This Week – 3/11/17
Canadian Tire Corp Limited Valuation – Initial Coverage $TSE:CTC.A

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Disclaimer:

The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

Canadian Tire Corp Limited Valuation – Initial Coverage $TSE:CTC.A

Benjamin Graham taught that Intelligent Investors must do a thorough fundamental analysis of investment opportunities to determine their intrinsic value and inherent risk.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company or by reviewing the 10 Stocks for Using A Benjamin Graham Value Investing Strategy – February 2017.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a stock analysis showing a specific look at how Canadian Tire Corp Limited (TSE:CTC.A) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Canadian Tire Corporation, Limited is a Canada-based company that operates through a range of businesses. The Company’s segments include Retail segment, the CT REIT segment and the Financial Services segment. The Retail segment operates retail banners, including Canadian Tire, PartSource, Petroleum, Mark’s and various FGL Sports banners. The CT REIT segment is engaged in owning, developing and leasing income-producing commercial properties. Its portfolio of properties consists of over 290 properties located across each of the provinces and two territories of Canada. Its property portfolio includes Canadian Tire stores, retail developments anchored by a Canadian Tire store, Canadian Tire distribution centers, a mixed-use commercial property, and development lands. Its Financial Services segment markets a range of Canadian Tire-branded credit cards, including the Canadian Tire Options MasterCard, the Cash Advantage MasterCard, the Gas Advantage MasterCard and the Sport Chek MasterCard.

CTC.A Chart

CTC.A data by YCharts

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Downloadable PDF version of this valuation:

ModernGraham Valuation of TSE-CTC.A – February 2017

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $10,939,153,299 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.85 Fail
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 97.73% Pass
6. Moderate PEmg Ratio PEmg < 20 16.93 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 2.24 Pass
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 1.85 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 0.67 Pass
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

Stage 2: Determination of Intrinsic Value

EPSmg $9.02
MG Growth Estimate 7.29%
MG Value $208.09
Opinion Undervalued
MG Grade B
MG Value based on 3% Growth $130.74
MG Value based on 0% Growth $76.64
Market Implied Growth Rate 4.21%
Current Price $152.64
% of Intrinsic Value 73.35%

Canadian Tire Corporation Limited qualifies for both the Defensive Investor and the Enterprising Investor. The Defensive Investor is only initially concerned with the low current ratio. The Enterprising Investor has no initial concerns. As a result, all value investors following the ModernGraham approach should feel comfortable proceeding with the analysis.

As for a valuation, the company appears to be Undervalued after growing its EPSmg (normalized earnings) from $6.07 in 2013 to an estimated $9.02 for 2017. This level of demonstrated earnings growth outpaces the market’s implied estimate of 4.21% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value above the price.

At the time of valuation, further research into Canadian Tire Corporation Limited revealed the company was trading above its Graham Number of $125.89. The company pays a dividend of $2.3 per share, for a yield of 1.5% Its PEmg (price over earnings per share – ModernGraham) was 16.93, which was below the industry average of 18.47, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-23.8.

Canadian Tire Corporation Limited performs fairly well in the ModernGraham grading system, scoring a B.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$23.80
Graham Number $125.89
PEmg 16.93
Current Ratio 1.85
PB Ratio 2.24
Current Dividend $2.30
Dividend Yield 1.51%
Number of Consecutive Years of Dividend Growth 7

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Useful Links:

ModernGraham tagged articles Morningstar
Google Finance MSN Money
Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Balance Sheet Information 12/1/2016
Total Current Assets $8,637,700,000
Total Current Liabilities $4,680,900,000
Long-Term Debt $2,667,100,000
Total Assets $15,302,800,000
Intangible Assets $1,280,300,000
Total Liabilities $10,364,200,000
Shares Outstanding (Diluted Average) 72,556,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $10.09
Dec2016 $9.22
Dec2015 $8.61
Dec2014 $7.59
Dec2013 $6.91
Dec2012 $6.10
Dec2011 $5.71
Dec2010 $5.42
Dec2009 $4.10
Dec2008 $4.60
Dec2007 $5.05
Dec2006 $4.31
Dec2005 $3.98
Dec2004 $3.53
Dec2003 $2.95
Dec2002 $2.53
Dec2001 $2.23
Dec2000 $1.89
Dec1999 $1.89
Dec1998 $2.09
Dec1997 $1.79

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $9.02
Dec2016 $8.22
Dec2015 $7.47
Dec2014 $6.72
Dec2013 $6.07
Dec2012 $5.49
Dec2011 $5.12
Dec2010 $4.78
Dec2009 $4.44
Dec2008 $4.51
Dec2007 $4.30
Dec2006 $3.77
Dec2005 $3.34
Dec2004 $2.89
Dec2003 $2.48
Dec2002 $2.21
Dec2001 $2.02

Recommended Reading:

Other ModernGraham posts about the company

None. This is the first time ModernGraham has covered the company.

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Disclaimer:

The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

Tractor Supply Co Valuation – February 2019 $TSCO

Company Profile (excerpt from Reuters): Tractor Supply Company, incorporated on December 2, 1982, is an operator of rural lifestyle retail stores in the United States. The Company is focused on supplying the needs of recreational farmers and ranchers and others, as well as tradesmen and small businesses. It is engaged in the retail sale of products that support the rural lifestyle. The Company operates retail stores under the names Tractor Supply Company, Del’s Feed & Farm Supply and Petsense, and operates Websites under the names TractorSupply.com and Petsense.com. Its stores are located primarily in towns outlying metropolitan markets and in rural communities. As of December 31, 2016, it operated 1,738 retail stores in 49 states (1,595 Tractor Supply and Del’s retail stores and 143 Petsense retail stores). Its Tractor Supply stores range in size from 15,000 to 20,000 square feet of inside selling space, along with additional outside selling space and its Petsense stores have approximately 5,500 square feet of inside selling space.

Downloadable PDF version of this valuation:

ModernGraham Valuation of TSCO – February 2019

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $11,690,451,950 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.91 Fail
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Fail
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 170.12% Pass
6. Moderate PEmg Ratio PEmg < 20 23.97 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 7.55 Fail
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 1.91 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 0.45 Pass
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $3.99
MG Growth Estimate 8.69%
MG Value $103.34
Opinion Fairly Valued
MG Grade C+
MG Value based on 3% Growth $57.88
MG Value based on 0% Growth $33.93
Market Implied Growth Rate 7.74%
Current Price $95.69
% of Intrinsic Value 92.60%

Tractor Supply Company is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, poor dividend history, and the high PEmg and PB ratios. The Enterprising Investor has no initial concerns. As a result, all Enterprising Investors following the ModernGraham approach should feel comfortable proceeding with the analysis.

As for a valuation, the company appears to be Fairly Valued after growing its EPSmg (normalized earnings) from $2.53 in 2015 to an estimated $3.99 for 2019. This level of demonstrated earnings growth supports the market’s implied estimate of 7.74% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value within a margin of safety relative to the price.

At the time of valuation, further research into Tractor Supply Company revealed the company was trading above its Graham Number of $36.55. The company pays a dividend of $1.2 per share, for a yield of 1.3% Its PEmg (price over earnings per share – ModernGraham) was 23.97, which was below the industry average of 27.33, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $2.2.

Tractor Supply Company receives an average overall rating in the ModernGraham grading system, scoring a C+.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) $2.20
Graham Number $36.55
PEmg 23.97
Current Ratio 1.91
PB Ratio 7.55
Current Dividend $1.20
Dividend Yield 1.25%
Number of Consecutive Years of Dividend Growth 9

Useful Links:

ModernGraham tagged articles Morningstar
Google Finance MSN Money
Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Balance Sheet Information 12/1/2018
Total Current Assets $1,794,399,000
Total Current Liabilities $938,107,000
Long-Term Debt $381,100,000
Total Assets $3,085,262,000
Intangible Assets $124,492,000
Total Liabilities $1,523,442,000
Shares Outstanding (Diluted Average) 123,172,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $4.64
Dec2018 $4.31
Dec2017 $3.30
Dec2016 $3.27
Dec2015 $3.00
Dec2014 $2.66
Dec2013 $2.32
Dec2012 $1.90
Dec2011 $1.51
Dec2010 $1.13
Dec2009 $0.82
Dec2008 $0.55
Dec2007 $0.60
Dec2006 $0.56
Dec2005 $0.52
Dec2004 $0.39
Dec2003 $0.35
Dec2002 $0.12
Dec2001 $0.18
Dec2000 $0.12
Dec1999 $0.13

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $3.99
Dec2018 $3.55
Dec2017 $3.08
Dec2016 $2.86
Dec2015 $2.53
Dec2014 $2.16
Dec2013 $1.79
Dec2012 $1.41
Dec2011 $1.08
Dec2010 $0.82
Dec2009 $0.65
Dec2008 $0.55
Dec2007 $0.53
Dec2006 $0.46
Dec2005 $0.38
Dec2004 $0.28
Dec2003 $0.21

Recommended Reading:

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Tractor Supply Co Valuation – April 2018 $TSCO
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Canadian Tire Corp Ltd Valuation – August 2018 $TSE:CTC.A

Disclaimer:

The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

Tapestry Inc Valuation – February 2019 $TPR

Company Profile (excerpt from Reuters): Tapestry, Inc., formerly Coach, Inc., incorporated on June 1, 2000, is a design house of luxury accessories and lifestyle collections. The Company’s product offering uses a range of leathers, fabrics and materials. The Company’s segments include North America, International and Stuart Weitzman. The Company’s product offering uses a range of leathers, fabrics and materials. The Company’s brands include Coach, Kate Spade, and Stuart Weitzman. The North America segment includes sales of Tapestry brand products to North American customers through Tapestry-operated stores (including the Internet) and sales to North American wholesale customers. The International segment includes sales to consumers through Tapestry-branded stores and concession shop-in-shops in Japan, mainland China, Hong Kong, Macau, Singapore, Taiwan, Malaysia, South Korea, the United Kingdom, France, Ireland, Spain, Portugal, Germany, Italy, Austria, Belgium, the Netherlands and Switzerland. The Stuart Weitzman segment includes sales across the world generated by the Stuart Weitzman brand, primarily through department stores in North America and international locations, and within Stuart Weitzman operated stores (including the Internet) in the United States, Canada and Europe.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of TPR – February 2019

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $9,818,655,256 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 2.74 Pass
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end -31.44% Fail
6. Moderate PEmg Ratio PEmg < 20 17.34 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 2.99 Fail
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 2.74 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 1.02 Pass
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Fail

 

Stage 2: Determination of Intrinsic Value

EPSmg $1.95
MG Growth Estimate -3.80%
MG Value $1.77
Opinion Overvalued
MG Grade C+
MG Value based on 3% Growth $28.31
MG Value based on 0% Growth $16.60
Market Implied Growth Rate 4.42%
Current Price $33.86
% of Intrinsic Value 1917.37%

Tapestry Inc is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the insufficient earnings growth over the last ten years, and the high PB ratio. The Enterprising Investor is only concerned with the lack of earnings growth over the last five years. As a result, all Enterprising Investors following the ModernGraham approach should feel comfortable proceeding with the analysis.

As for a valuation, the company appears to be Overvalued after seeing its EPSmg (normalized earnings) decline from $2.61 in 2015 to an estimated $1.95 for 2019. This level of demonstrated earnings growth does not support the market’s implied estimate of 4.42% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value below the price.

At the time of valuation, further research into Tapestry Inc revealed the company was trading above its Graham Number of $25.42. The company pays a dividend of $1.35 per share, for a yield of 4%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 17.34, which was below the industry average of 27.33, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-3.17.

Tapestry Inc receives an average overall rating in the ModernGraham grading system, scoring a C+.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$3.17
Graham Number $25.42
PEmg 17.34
Current Ratio 2.74
PB Ratio 2.99
Current Dividend $1.35
Dividend Yield 3.99%
Number of Consecutive Years of Dividend Growth 0

Useful Links:

ModernGraham tagged articles Morningstar
Google Finance MSN Money
Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Balance Sheet Information 9/1/2018
Total Current Assets $2,467,500,000
Total Current Liabilities $899,400,000
Long-Term Debt $1,594,500,000
Total Assets $6,703,300,000
Intangible Assets $3,213,500,000
Total Liabilities $3,393,700,000
Shares Outstanding (Diluted Average) 292,000,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $2.55
Jun2018 $1.38
Jun2017 $2.09
Jun2016 $1.65
Jun2015 $1.45
Jun2014 $2.79
Jun2013 $3.61
Jun2012 $3.53
Jun2011 $2.92
Jun2010 $2.33
Jun2009 $1.91
Jun2008 $2.17
Jun2007 $1.76
Jun2006 $1.27
Jun2005 $0.86
Jun2004 $0.57
Jun2003 $0.33
Jun2002 $0.24
Jun2001 $0.19
Jun2000 $0.14
Jun1999 $0.06

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $1.95
Jun2018 $1.73
Jun2017 $2.04
Jun2016 $2.21
Jun2015 $2.61
Jun2014 $3.14
Jun2013 $3.17
Jun2012 $2.82
Jun2011 $2.38
Jun2010 $2.04
Jun2009 $1.79
Jun2008 $1.60
Jun2007 $1.20
Jun2006 $0.83
Jun2005 $0.55
Jun2004 $0.36
Jun2003 $0.23

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Canadian Tire Corp Ltd Valuation – August 2018 $TSE:CTC.A
McKesson Corp Valuation – June 2018 $MCK

Disclaimer:

The author held a long position in TPR but did not hold a position in any other company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

Tiffany & Co Valuation – February 2019 $TIF

Company Profile (excerpt from Reuters): Tiffany & Co., incorporated on August 16, 1984, is a holding company that operates through its subsidiary companies. The Company’s principal subsidiary, Tiffany and Company (Tiffany), is a jeweler and specialty retailer. Through its subsidiaries, the Company designs and manufactures products and operates TIFFANY & CO. retail stores around the world, and also sells its products through Internet, catalog, business-to-business and wholesale operations. The Company’s segments include Americas, Asia-Pacific, Japan, Europe and Other. The Company also sells timepieces, leather goods, sterling silverware, china, crystal, stationery, fragrances and accessories.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of TIF – February 2019

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $10,742,782,275 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 5.86 Pass
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 33.17% Fail
6. Moderate PEmg Ratio PEmg < 20 23.33 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 3.59 Fail
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 5.86 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 0.29 Pass
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $3.78
MG Growth Estimate 4.44%
MG Value $65.64
Opinion Overvalued
MG Grade C+
MG Value based on 3% Growth $54.76
MG Value based on 0% Growth $32.10
Market Implied Growth Rate 7.41%
Current Price $88.10
% of Intrinsic Value 134.21%

Tiffany & Co. is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the insufficient earnings growth over the last ten years, and the high PEmg and PB ratios. The Enterprising Investor has no initial concerns. As a result, all Enterprising Investors following the ModernGraham approach should feel comfortable proceeding with the analysis.

As for a valuation, the company appears to be Overvalued after growing its EPSmg (normalized earnings) from $2.91 in 2015 to an estimated $3.78 for 2019. This level of demonstrated earnings growth does not support the market’s implied estimate of 7.41% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value below the price.

At the time of valuation, further research into Tiffany & Co. revealed the company was trading above its Graham Number of $52.13. The company pays a dividend of $1.95 per share, for a yield of 2.2%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 23.33, which was below the industry average of 27.33, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $12.43.

Tiffany & Co. receives an average overall rating in the ModernGraham grading system, scoring a C+.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) $12.43
Graham Number $52.13
PEmg 23.33
Current Ratio 5.86
PB Ratio 3.59
Current Dividend $1.95
Dividend Yield 2.21%
Number of Consecutive Years of Dividend Growth 15

Useful Links:

ModernGraham tagged articles Morningstar
Google Finance MSN Money
Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Balance Sheet Information 10/1/2018
Total Current Assets $3,608,500,000
Total Current Liabilities $615,500,000
Long-Term Debt $880,000,000
Total Assets $5,100,700,000
Intangible Assets $0
Total Liabilities $2,078,300,000
Shares Outstanding (Diluted Average) 123,100,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $4.65
Jan2018 $2.96
Jan2017 $3.55
Jan2016 $3.59
Jan2015 $3.73
Jan2014 $1.41
Jan2013 $3.25
Jan2012 $3.40
Jan2011 $2.87
Jan2010 $2.11
Jan2009 $1.74
Jan2008 $2.34
Jan2007 $1.80
Jan2006 $1.75
Jan2005 $2.05
Jan2004 $1.45
Jan2003 $1.28
Jan2002 $1.15
Jan2001 $1.26
Jan2000 $0.97
Jan1999 $0.63

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $3.78
Jan2018 $3.24
Jan2017 $3.29
Jan2016 $3.13
Jan2015 $2.91
Jan2014 $2.54
Jan2013 $2.96
Jan2012 $2.71
Jan2011 $2.30
Jan2010 $1.99
Jan2009 $1.93
Jan2008 $1.98
Jan2007 $1.76
Jan2006 $1.67
Jan2005 $1.56
Jan2004 $1.29
Jan2003 $1.16

Recommended Reading:

Other ModernGraham posts about the company

Tiffany & Co. Valuation – April 2018 $TIF
Tiffany & Co Valuation – August 2016 $TIF
Tiffany & Company Valuation – February 2016 Update $TIF
Tiffany and Company Valuation – October 2015 Update $TIF
Tiffany & Company Analysis – July 2015 Update $TIF

Other ModernGraham posts about related companies

Best Buy Co Inc Valuation – February 2019 $BBY
Macy’s Inc Valuation – January 2019 $M
Ross Stores Inc Valuation – January 2019 $ROST
Walgreens Boots Alliance Inc Valuation – December 2018 $WBA
Nordstrom Inc Valuation – December 2018 $JWN
Walmart Inc Valuation – November 2018 $WMT
Canadian Tire Corp Ltd Valuation – August 2018 $TSE:CTC.A
McKesson Corp Valuation – June 2018 $MCK
Big 5 Sporting Goods Corp Valuation – June 2018 $BGFV
Amazon.com Inc Valuation – June 2018 $AMZN

Disclaimer:

The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

Best Buy Co Inc Valuation – February 2019 $BBY

Company Profile (excerpt from Reuters): Best Buy Co., Inc., incorporated on October 20, 1966, is a provider of technology products, services and solutions. The Company offers products and services to the customers visiting its stores, engaging with Geek Squad agents, or using its Websites or mobile applications. It has operations in the United States, Canada and Mexico. The Company operates through two segments: Domestic and International. The Domestic segment consists of the operations in all states, districts and territories of the United States, under various brand names, including Best Buy, bestbuy.com, Best Buy Mobile, Best Buy Direct, Best Buy Express, Geek Squad, Magnolia Home Theater, and Pacific Kitchen and Home. The International segment consists of all operations in Canada and Mexico under the brand names, Best Buy, bestbuy.com.ca, bestbuy.com.mx, Best Buy Express, Best Buy Mobile and Geek Squad. As of December 31, 2016, the Company operated 1,200 large-format and 400 small-format stores throughout its Domestic and International segments. It has a global sourcing operation to design, develop, test and contract-manufacture its brand products.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of BBY – February 2019

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $15,734,394,268 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.10 Fail
3. Earnings Stability Positive EPS for 10 years prior Fail
4. Dividend Record Dividend Payments for 10 years prior Fail
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 330.85% Pass
6. Moderate PEmg Ratio PEmg < 20 15.00 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 5.42 Fail
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 1.10 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 1.32 Fail
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $3.90
MG Growth Estimate 15.00%
MG Value $150.10
Opinion Undervalued
MG Grade C
MG Value based on 3% Growth $56.53
MG Value based on 0% Growth $33.14
Market Implied Growth Rate 3.25%
Current Price $58.47
% of Intrinsic Value 38.95%

Best Buy Co Inc does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, insufficient earnings stability over the last ten years, and the poor dividend history, and the high PB ratio. The Enterprising Investor has concerns regarding the level of debt relative to the current assets. As a result, all value investors following the ModernGraham approach should explore other opportunities at this time or proceed cautiously with a speculative attitude.

As for a valuation, the company appears to be Undervalued after growing its EPSmg (normalized earnings) from $1.33 in 2015 to an estimated $3.9 for 2019. This level of demonstrated earnings growth outpaces the market’s implied estimate of 3.25% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value above the price.

At the time of valuation, further research into Best Buy Co Inc revealed the company was trading above its Graham Number of $38.2. The company pays a dividend of $1.36 per share, for a yield of 2.3%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 15, which was below the industry average of 27.33, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-3.89.

Best Buy Co Inc receives an average overall rating in the ModernGraham grading system, scoring a C.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$3.89
Graham Number $38.20
PEmg 15.00
Current Ratio 1.10
PB Ratio 5.42
Current Dividend $1.36
Dividend Yield 2.33%
Number of Consecutive Years of Dividend Growth 5

Useful Links:

ModernGraham tagged articles Morningstar
Google Finance MSN Money
Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Balance Sheet Information 10/1/2018
Total Current Assets $10,901,000,000
Total Current Liabilities $9,933,000,000
Long-Term Debt $1,280,000,000
Total Assets $15,000,000,000
Intangible Assets $1,304,000,000
Total Liabilities $11,988,000,000
Shares Outstanding (Diluted Average) 279,300,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $5.08
Jan2018 $3.26
Jan2017 $3.81
Jan2016 $2.56
Jan2015 $3.49
Jan2014 $1.53
Jan2013 $0.00
Feb2012 -$3.36
Feb2011 $3.08
Feb2010 $3.10
Feb2009 $2.39
Feb2008 $3.12
Feb2007 $2.79
Feb2006 $2.27
Feb2005 $1.96
Feb2004 $1.41
Feb2003 $0.21
Feb2002 $1.18
Feb2001 $0.83
Feb2000 $0.73
Feb1999 $0.46

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $3.90
Jan2018 $3.18
Jan2017 $2.85
Jan2016 $1.87
Jan2015 $1.33
Jan2014 $0.46
Jan2013 $0.29
Feb2012 $0.85
Feb2011 $2.93
Feb2010 $2.82
Feb2009 $2.62
Feb2008 $2.59
Feb2007 $2.13
Feb2006 $1.67
Feb2005 $1.28
Feb2004 $0.92
Feb2003 $0.68

Recommended Reading:

Other ModernGraham posts about the company

Best Buy Co Inc Valuation – April 2018 $BBY
Best Buy Co Valuation – July 2016 $BBY
Best Buy Stock Analysis – 2015 Annual Update $BBY
19 Companies in the Spotlight This Week – 3/15/14
Best Buy Company Inc. (BBY) Annual Valuation

Other ModernGraham posts about related companies

Ross Stores Inc Valuation – January 2019 $ROST
Walgreens Boots Alliance Inc Valuation – December 2018 $WBA
Nordstrom Inc Valuation – December 2018 $JWN
Walmart Inc Valuation – November 2018 $WMT
Canadian Tire Corp Ltd Valuation – August 2018 $TSE:CTC.A
McKesson Corp Valuation – June 2018 $MCK
Big 5 Sporting Goods Corp Valuation – June 2018 $BGFV
Amazon.com Inc Valuation – June 2018 $AMZN
Fossil Group Inc Valuation – June 2018 $FOSL
Costco Wholesale Corp Valuation – June 2018 $COST

Disclaimer:

The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

Macy’s Inc Valuation – January 2019 $M

Company Profile (excerpt from Reuters): Macy’s, Inc., incorporated on December 13, 1985, is an omnichannel retail company operating stores, Websites and mobile applications under various brands, such as Macy’s, Bloomingdale’s and Bluemercury. The Company sells a range of merchandise, including apparel and accessories (men’s, women’s and children’s), cosmetics, home furnishings and other consumer goods. The Company’s subsidiaries provide various support functions to its retail operations on an integrated, company-wide basis. The Company’s bank subsidiary, FDS Bank, provides credit processing, certain collections, customer service and credit marketing services in respect of all credit card accounts that are owned either by Department Stores National Bank (DSNB), a subsidiary of Citibank N.A., or FDS Bank and that constitutes a part of the credit programs of the Company’s retail operations. Macy’s Systems and Technology, Inc. (MST), a subsidiary of the Company, provides operational electronic data processing and management information services to all of the Company’s operations.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of M – January 2019

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $7,941,872,586 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.34 Fail
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 88.38% Pass
6. Moderate PEmg Ratio PEmg < 20 7.01 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 1.42 Pass
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 1.34 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 2.46 Fail
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $3.68
MG Growth Estimate 0.29%
MG Value $33.41
Opinion Fairly Valued
MG Grade A-
MG Value based on 3% Growth $53.30
MG Value based on 0% Growth $31.25
Market Implied Growth Rate -0.75%
Current Price $25.76
% of Intrinsic Value 77.11%

Macy’s Inc qualifies for both the Defensive Investor and the Enterprising Investor. The Defensive Investor is only initially concerned with the low current ratio. The Enterprising Investor has concerns regarding the level of debt relative to the current assets. As a result, all value investors following the ModernGraham approach should feel comfortable proceeding with the analysis.

As for a valuation, the company appears to be Fairly Valued after growing its EPSmg (normalized earnings) from $3.61 in 2015 to an estimated $3.68 for 2019. This level of demonstrated earnings growth supports the market’s implied estimate of 0.75% annual earnings loss over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value within a margin of safety relative to the price.

At the time of valuation, further research into Macy’s Inc revealed the company was trading below its Graham Number of $39.21. The company pays a dividend of $1.51 per share, for a yield of 5.9%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 7.01, which was below the industry average of 25.4, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-19.38.

Macy’s Inc fares extremely well in the ModernGraham grading system, scoring an A-.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$19.38
Graham Number $39.21
PEmg 7.01
Current Ratio 1.34
PB Ratio 1.42
Current Dividend $1.51
Dividend Yield 5.86%
Number of Consecutive Years of Dividend Growth 7

Useful Links:

ModernGraham tagged articles Morningstar
Google Finance MSN Money
Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Balance Sheet Information 10/1/2018
Total Current Assets $8,667,000,000
Total Current Liabilities $6,444,000,000
Long-Term Debt $5,469,000,000
Total Assets $20,361,000,000
Intangible Assets $4,389,000,000
Total Liabilities $14,716,000,000
Shares Outstanding (Diluted Average) 312,200,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $3.67
Jan2018 $5.04
Jan2017 $1.99
Jan2016 $3.22
Jan2015 $4.22
Jan2014 $3.86
Jan2013 $3.24
Jan2012 $2.92
Jan2011 $1.98
Jan2010 $0.78
Jan2009 -$11.40
Jan2008 $1.97
Jan2007 $1.81
Jan2006 $3.24
Jan2005 $1.93
Jan2004 $1.86
Jan2003 $2.06
Jan2002 -$0.71
Jan2001 -$0.45
Jan2000 $1.81
Jan1999 $1.48

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $3.68
Jan2018 $3.67
Jan2017 $3.10
Jan2016 $3.60
Jan2015 $3.61
Jan2014 $3.05
Jan2013 $1.60
Jan2012 $0.27
Jan2011 -$1.03
Jan2010 -$1.93
Jan2009 -$2.35
Jan2008 $2.17
Jan2007 $2.24
Jan2006 $2.19
Jan2005 $1.43
Jan2004 $1.09
Jan2003 $0.75

Recommended Reading:

Other ModernGraham posts about the company

10 Stocks for Using A Benjamin Graham Value Investing Strategy – May 2018
Macy’s Inc Valuation – April 2018 $M
Macy’s Inc Valuation – July 2016 $M
27 Companies in the Spotlight This Week – 2/14/15
Macy’s Inc. Annual Valuation – 2015 $M

Other ModernGraham posts about related companies

Ross Stores Inc Valuation – January 2019 $ROST
Walgreens Boots Alliance Inc Valuation – December 2018 $WBA
Nordstrom Inc Valuation – December 2018 $JWN
Walmart Inc Valuation – November 2018 $WMT
Canadian Tire Corp Ltd Valuation – August 2018 $TSE:CTC.A
McKesson Corp Valuation – June 2018 $MCK
Big 5 Sporting Goods Corp Valuation – June 2018 $BGFV
Amazon.com Inc Valuation – June 2018 $AMZN
Fossil Group Inc Valuation – June 2018 $FOSL
Costco Wholesale Corp Valuation – June 2018 $COST

Disclaimer:

The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

Ross Stores Inc Valuation – January 2019 $ROST

Company Profile (excerpt from Reuters): Ross Stores, Inc., incorporated on March 29, 1989, and its subsidiaries operate two brands of off-price retail apparel and home fashion stores-Ross Dress for Less (Ross) and dd’s DISCOUNTS. The Company is the off-price apparel and home fashion chain in the United States, with 1,340 locations in 36 states, the District of Columbia and Guam, as of January 28, 2017. The Company offers in-season, name brand and designer apparel, accessories, footwear, and home fashions for the entire family at savings of 20% to 60% off department and specialty store regular prices every day. The Company also operated 193 dd’s DISCOUNTS stores in 15 states as of January 28, 2017.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of ROST – January 2019

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $30,957,153,472 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.61 Fail
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 202.02% Pass
6. Moderate PEmg Ratio PEmg < 20 24.85 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 9.72 Fail
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 1.61 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 0.23 Pass
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $3.36
MG Growth Estimate 11.90%
MG Value $108.54
Opinion Fairly Valued
MG Grade B
MG Value based on 3% Growth $48.74
MG Value based on 0% Growth $28.57
Market Implied Growth Rate 8.18%
Current Price $83.53
% of Intrinsic Value 76.96%

Ross Stores, Inc. is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, high PEmg and PB ratios. The Enterprising Investor has no initial concerns. As a result, all Enterprising Investors following the ModernGraham approach should feel comfortable proceeding with the analysis.

As for a valuation, the company appears to be Fairly Valued after growing its EPSmg (normalized earnings) from $1.87 in 2015 to an estimated $3.36 for 2019. This level of demonstrated earnings growth supports the market’s implied estimate of 8.18% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value within a margin of safety relative to the price.

At the time of valuation, further research into Ross Stores, Inc. revealed the company was trading above its Graham Number of $27.22. The company pays a dividend of $0.64 per share, for a yield of 0.8% Its PEmg (price over earnings per share – ModernGraham) was 24.85, which was below the industry average of 25.4, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $1.55.

Ross Stores, Inc. performs fairly well in the ModernGraham grading system, scoring a B.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) $1.55
Graham Number $27.22
PEmg 24.85
Current Ratio 1.61
PB Ratio 9.72
Current Dividend $0.64
Dividend Yield 0.77%
Number of Consecutive Years of Dividend Growth 20

Useful Links:

ModernGraham tagged articles Morningstar
Google Finance MSN Money
Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Balance Sheet Information 10/1/2018
Total Current Assets $3,623,307,000
Total Current Liabilities $2,252,294,000
Long-Term Debt $312,328,000
Total Assets $6,235,767,000
Intangible Assets $0
Total Liabilities $3,048,604,000
Shares Outstanding (Diluted Average) 371,061,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $4.10
Jan2018 $3.55
Jan2017 $2.83
Jan2016 $2.51
Jan2015 $2.21
Jan2014 $1.94
Jan2013 $1.77
Jan2012 $1.43
Jan2011 $1.16
Jan2010 $0.89
Jan2009 $0.58
Jan2008 $0.48
Jan2007 $0.43
Jan2006 $0.34
Jan2005 $0.28
Jan2004 $0.37
Jan2003 $0.31
Jan2002 $0.24
Jan2001 $0.23
Jan2000 $0.21
Jan1999 $0.18

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $3.36
Jan2018 $2.86
Jan2017 $2.43
Jan2016 $2.14
Jan2015 $1.87
Jan2014 $1.62
Jan2013 $1.36
Jan2012 $1.07
Jan2011 $0.83
Jan2010 $0.62
Jan2009 $0.47
Jan2008 $0.40
Jan2007 $0.36
Jan2006 $0.32
Jan2005 $0.30
Jan2004 $0.30
Jan2003 $0.25

Recommended Reading:

Other ModernGraham posts about the company

Best Dividend Paying Stocks for Dividend Growth Investors – August 2018
Best Dividend Paying Stocks for Dividend Growth Investors – June 2018
Best Dividend Paying Stocks for Dividend Growth Investors – April 2018
Ross Stores Inc Valuation – March 2018 $ROST
Best Dividend Paying Stocks for Dividend Growth Investors – August 2017

Other ModernGraham posts about related companies

Walgreens Boots Alliance Inc Valuation – December 2018 $WBA
Nordstrom Inc Valuation – December 2018 $JWN
Walmart Inc Valuation – November 2018 $WMT
Canadian Tire Corp Ltd Valuation – August 2018 $TSE:CTC.A
McKesson Corp Valuation – June 2018 $MCK
Big 5 Sporting Goods Corp Valuation – June 2018 $BGFV
Amazon.com Inc Valuation – June 2018 $AMZN
Fossil Group Inc Valuation – June 2018 $FOSL
Costco Wholesale Corp Valuation – June 2018 $COST
Lumber Liquidators Holdings Inc Valuation – June 2018 $LL

Disclaimer:

The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

Walgreens Boots Alliance Inc Valuation – December 2018 $WBA

Company Profile (excerpt from Reuters): Walgreens Boots Alliance, Inc., incorporated on September 2, 2014, is a holding company. The Company is a pharmacy-led health and wellbeing company. The Company along with equity method investments, has approximately 18,500 stores in 11 countries also has pharmaceutical wholesale and distribution networks with more than 390 distribution centers delivering to more than 230,000 pharmacies, doctors, health centers and hospitals each year in more than 20 countries. The Company operates through three segments: Retail Pharmacy USA, Retail Pharmacy International and Pharmaceutical Wholesale. The Retail Pharmacy USA segment consists of the Walgreen Co. (Walgreens) business, which includes the operation of retail drugstores, care clinics and providing specialty pharmacy services. The Retail Pharmacy International segment consists primarily of the Alliance Boots pharmacy-led health and beauty stores, optical practices and related contract manufacturing operations. The Pharmaceutical Wholesale segment consists of the Alliance Boots pharmaceutical wholesaling and distribution businesses. The Company’s portfolio of retail and business brands includes Walgreens, Duane Reade, Boots and Alliance Healthcare, as well as global health and beauty product brands, including No7, Botanics, Liz Earle and Soap & Glory.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of WBA – December 2018

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $72,797,457,454 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 0.82 Fail
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 97.99% Pass
6. Moderate PEmg Ratio PEmg < 20 15.80 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 2.82 Pass
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 0.82 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 -3.25 Fail
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $4.87
MG Growth Estimate 10.03%
MG Value $139.17
Opinion Undervalued
MG Grade B+
MG Value based on 3% Growth $70.64
MG Value based on 0% Growth $41.41
Market Implied Growth Rate 3.65%
Current Price $76.97
% of Intrinsic Value 55.30%

Walgreens Boots Alliance Inc qualifies for both the Defensive Investor and the Enterprising Investor. The Defensive Investor is only initially concerned with the low current ratio. The Enterprising Investor has concerns regarding the level of debt relative to the current assets. As a result, all value investors following the ModernGraham approach should feel comfortable proceeding with the analysis.

As for a valuation, the company appears to be Undervalued after growing its EPSmg (normalized earnings) from $2.92 in 2015 to an estimated $4.87 for 2019. This level of demonstrated earnings growth outpaces the market’s implied estimate of 3.65% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value above the price.

At the time of valuation, further research into Walgreens Boots Alliance Inc revealed the company was trading above its Graham Number of $60.62. The company pays a dividend of $1.64 per share, for a yield of 2.1%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 15.8, which was below the industry average of 28.23, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-24.11.

Walgreens Boots Alliance Inc performs fairly well in the ModernGraham grading system, scoring a B+.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$24.11
Graham Number $60.62
PEmg 15.80
Current Ratio 0.82
PB Ratio 2.82
Current Dividend $1.64
Dividend Yield 2.13%
Number of Consecutive Years of Dividend Growth 15

Useful Links:

ModernGraham tagged articles Morningstar
Google Finance MSN Money
Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Balance Sheet Information 8/1/2018
Total Current Assets $17,846,000,000
Total Current Liabilities $21,667,000,000
Long-Term Debt $12,431,000,000
Total Assets $68,124,000,000
Intangible Assets $28,697,000,000
Total Liabilities $41,435,000,000
Shares Outstanding (Diluted Average) 978,200,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $5.98
Aug2018 $5.05
Aug2017 $3.78
Aug2016 $3.82
Aug2015 $4.00
Aug2014 $2.00
Aug2013 $2.67
Aug2012 $2.42
Aug2011 $2.94
Aug2010 $2.12
Aug2009 $2.02
Aug2008 $2.17
Aug2007 $2.03
Aug2006 $1.72
Aug2005 $1.52
Aug2004 $1.31
Aug2003 $1.13
Aug2002 $0.99
Aug2001 $0.86
Aug2000 $0.76
Aug1999 $0.62

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $4.87
Aug2018 $4.12
Aug2017 $3.52
Aug2016 $3.26
Aug2015 $2.92
Aug2014 $2.40
Aug2013 $2.54
Aug2012 $2.43
Aug2011 $2.37
Aug2010 $2.06
Aug2009 $1.99
Aug2008 $1.90
Aug2007 $1.69
Aug2006 $1.46
Aug2005 $1.27
Aug2004 $1.10
Aug2003 $0.96

Recommended Reading:

Other ModernGraham posts about the company

Walgreens Boots Alliance Inc Valuation – March 2018 $WBA
Walgreens Boots Alliance Inc Valuation – July 2016 $WBA
47 Companies in the Spotlight This Week – 5/16/15
Walgreens Boots Alliance Inc. Annual Valuation – 2015 $WBA
40 Companies in the Spotlight This Week – 2/21/15

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Disclaimer:

The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

Nordstrom Inc Valuation – December 2018 $JWN

Company Profile (excerpt from Reuters): Nordstrom, Inc., incorporated on September 28, 1946, is a fashion specialty retailer in the United States. The Company’s segments include Retail and Credit. As of March 20, 2017, the Company operated 344 the United States stores located in 40 states as well as an e-commerce business through Nordstrom.com, Nordstromrack.com/HauteLook and TrunkClub.com. As of January 28, 2017, the Company operated approximately three Nordstrom full-line stores, including two in Canada, and 21 Nordstrom Rack stores. The Company also offers its customers a variety of payment products and services, including credit and debit cards.

JWN Chart

JWN data by YCharts

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of JWN – December 2018

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $8,611,864,656 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.12 Fail
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end -0.38% Fail
6. Moderate PEmg Ratio PEmg < 20 17.84 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 7.28 Fail
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 1.12 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 5.89 Fail
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Fail

 

Stage 2: Determination of Intrinsic Value

EPSmg $2.85
MG Growth Estimate -2.94%
MG Value $7.48
Opinion Overvalued
MG Grade D+
MG Value based on 3% Growth $41.32
MG Value based on 0% Growth $24.22
Market Implied Growth Rate 4.67%
Current Price $50.82
% of Intrinsic Value 679.67%

Nordstrom, Inc. does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, insufficient earnings growth over the last ten years, and the high PB ratio. The Enterprising Investor has concerns regarding the level of debt relative to the current assets, and the lack of earnings growth over the last five years. As a result, all value investors following the ModernGraham approach should explore other opportunities at this time or proceed cautiously with a speculative attitude.

As for a valuation, the company appears to be Overvalued after seeing its EPSmg (normalized earnings) decline from $3.54 in 2015 to an estimated $2.85 for 2019. This level of demonstrated earnings growth does not support the market’s implied estimate of 4.67% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value below the price.

At the time of valuation, further research into Nordstrom, Inc. revealed the company was trading above its Graham Number of $20.71. The company pays a dividend of $1.48 per share, for a yield of 2.9%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 17.84, which was below the industry average of 28.23, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-18.61.

Nordstrom, Inc. scores quite poorly in the ModernGraham grading system, with an overall grade of D+.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$18.61
Graham Number $20.71
PEmg 17.84
Current Ratio 1.12
PB Ratio 7.28
Current Dividend $1.48
Dividend Yield 2.91%
Number of Consecutive Years of Dividend Growth 0

Useful Links:

ModernGraham tagged articles Morningstar
Google Finance MSN Money
Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Balance Sheet Information 10/1/2018
Total Current Assets $4,297,000,000
Total Current Liabilities $3,842,000,000
Long-Term Debt $2,678,000,000
Total Assets $8,709,000,000
Intangible Assets $249,000,000
Total Liabilities $7,506,000,000
Shares Outstanding (Diluted Average) 172,400,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $3.26
Jan2018 $2.59
Jan2017 $2.02
Jan2016 $3.15
Jan2015 $3.72
Jan2014 $3.71
Jan2013 $3.56
Jan2012 $3.14
Jan2011 $2.75
Jan2010 $2.01
Jan2009 $1.83
Jan2008 $2.88
Jan2007 $2.55
Jan2006 $1.98
Jan2005 $1.39
Jan2004 $0.88
Jan2003 $0.33
Jan2002 $0.46
Jan2001 $0.39
Jan2000 $0.73
Jan1999 $0.71

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $2.85
Jan2018 $2.78
Jan2017 $2.99
Jan2016 $3.47
Jan2015 $3.54
Jan2014 $3.31
Jan2013 $2.96
Jan2012 $2.62
Jan2011 $2.37
Jan2010 $2.21
Jan2009 $2.24
Jan2008 $2.28
Jan2007 $1.79
Jan2006 $1.28
Jan2005 $0.85
Jan2004 $0.57
Jan2003 $0.46

Recommended Reading:

Other ModernGraham posts about the company

Nordstrom Inc Valuation – February 2018 $JWN
Nordstrom Inc Valuation – May 2016 $JWN
10 Best Stocks For Value Investors This Week – 10/31/15
Nordstrom Inc. Valuation – October 2015 Update $JWN
The Best Companies of the Retail Industry – August 2015

Other ModernGraham posts about related companies

Walmart Inc Valuation – November 2018 $WMT
Canadian Tire Corp Ltd Valuation – August 2018 $TSE:CTC.A
McKesson Corp Valuation – June 2018 $MCK
Big 5 Sporting Goods Corp Valuation – June 2018 $BGFV
Amazon.com Inc Valuation – June 2018 $AMZN
Fossil Group Inc Valuation – June 2018 $FOSL
Costco Wholesale Corp Valuation – June 2018 $COST
Lumber Liquidators Holdings Inc Valuation – June 2018 $LL
CVS Health Corp Valuation – June 2018 $CVS
Target Corp Valuation – June 2018 $TGT

Disclaimer:

The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

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